Timing of an Appeal for More Aid and Appealing the Asset Value of Unsold Real Estate

How soon after filing the FAFSA can I request a professional
judgement review (without seeming overanxious)? We tried to sell our
previous home last year without success. The home is vacant and not
used for rental. Naturally we have to list this as an asset which
makes our total assets look like more than they are. Furthermore, the
value we used was taken from the county tax records, which does not
accurately reflect the downturn in the housing market (or the fact
that no houses in the area are selling for that amount), and also
inflated our total assets. We intend to use the money from the sale to
pay down our current mortgage.
— G. L.

You can contact the college at any time to request a professional
judgment review. Don’t worry about seeming overanxious, as this does
not affect the outcome of the review.

You do not need to wait until you receive a financial aid award letter
from the college to appeal for more aid. However, it is best to wait
until you receive the Student Aid Report (SAR) after submitting the
Free Application for Federal Student Aid (FAFSA). Receipt of the SAR
is an indication that the college has received the financial
information from your FAFSA.

The FAFSA ignores the net home equity in the family’s principal place
of residence, but does consider the net home equity for other real
estate. The CSS/Financial Aid PROFILE form considers the net home
equity for both, but caps it at 2-3 times income.

Because the Higher Education Act of 1965 specifically addresses the
treatment of real estate as an asset, the college financial aid office
will be predisposed toward denying your appeal.

To increase your chances of getting a positive outcome, gather as much
documentation as possible that demonstrates that your situation is
unusual. For example, ask a real estate agent to pull data from the
multilist showing average number of months unsold for similar
properties or to provide a statement that no similar properties have
sold in the last year. Data comparing the current real estate market
to previous years could also help, such as the total number of
listings, the average selling price, the ratio of selling price to
county assessments, and so on. Provide information about the price at
which you listed the property and the number of months it has remained
unsold. Use the
Federal
Housing Index Calculator on the FinAid site to calculate the
minimum derived value of the property.

It would also be a good idea to get a formal appraisal of the
property. Not only will this document a lower value for the property,
but you might be able to use that appraisal to appeal the county
assessment to get a reduction in your property taxes.

Your appeal for an adjustment to your assets will be based on two
arguments: (1) It is unreasonable to count the house as an asset
because you have been unable to sell it and (2) If the house is
counted as an asset, the asset value should be less than the county’s
assessment.

Also note whether there have been other changes in your family’s
financial circumstances that should be mentioned in the professional
judgment review. Did anything change from last year to this year, such
as a salary reduction or a suspension of bonuses? Is there anything
that distinguishes your family from typical families? If the college
financial aid administrator agrees with your arguments concerning the
home’s value, but feels uncomfortable making such an adjustment, they
might give you the benefit of the doubt on other adjustments.